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Economics of Education Canceled spring 2019

Course content

This course explores why individuals and societies invest in
education. Education has many private benefits (earnings,
employment, health and longevity, consumption value), as well as
social benefits (GDP growth, tax income, positive externalities).
Education also affects inequality within a generation and across
generations. Throughout this course, current policy issues
concerning education will be discussed. Economic models will be
connected to data that can be used to test the models'
implications, and students will learn how models and data can serve
to inform education policy. Applications will address primary and
secondary education, university education, and vocational or
on-the-job training, and place the Danish and European experience
in an international context.

First, we introduce human capital theory to study individual
decision-making. It will be used to analyze investments in
education and how they are affected by ability, comparative
advantage, family background, and macroeconomic conditions. We will
encounter the empirical problem of disentangling the return to
education from the return to innate ability, and investigate how
the association between education and individual earnings has
changed over time.

At the societal level, we study the social return to education
and the financing of publicly provided schooling. Looking at the
production of education, we ask how educational outcomes are
produced by schools, whether financial resources improve student
achievement, and which school inputs are more or less effective in
producing desired educational outcomes (such as PISA test scores).
We will consider the potential of early childhood education in the
context of skill-formation over the life cycle. We will also
reflect on possible conflicts between societal goals - efficiency,
equity, and liberty - that influence decisions about the allocation
of education resources.

From a macro perspective, education matters for national
economic growth as well as for individual mobility. We investigate
whether there is a risk of over-education, or whether individuals
under-invest in light of a rapidly changing economic reality and
international competition. We also study the intergenerational
transmission of economic status through parental investments,
credit constraints and achievement inequality, and the resulting
income distribution.

This course will teach students how to apply economic thinking
to education-related questions. In doing so, the class will draw on
a wide range of economic principles and apply previously learned
material. The variety of models and perspectives will range from
macro to micro, including labor economics, macroeconomic growth,
and public finance. Students will be equipped with an economic
toolbox to evaluate education policy issues methodically, and
should eventually be able to use these tools to inform education
policy. While the course will be based on theory, it is
nevertheless of an empirical nature: recent data will be used to
evaluate current issues, and students will learn how to read
empirical articles that form the state-of-the art in economics of
education.

After taking this course, students should be able to apply
economic theories to address education question as a well-trained
economist and should be able to:

Knowledge:

Understand economic models in the education
context,

confidently identify determinants of
equilibrium/optimality and describe the role they play
relative to each other.

Recall the frameworks and their assumptions, as well
as their economic predictions.

Know the empirical state-of-the-discipline where they need to
be able to read selected articles in economic journals and
exctract the appropriate conclusions. Additionally, they
need to examine whether the presented empirical evidence
convincingly identifies causal relationships. Later, evidence needs
to be recalled to address topics.

Skills:

Identify key questions in a brief non-specific text,
presented as a policy issue rather than an economic model. Then,
link the key questions to economics of education.

Need to select the theories and pieces of empirical
evidence which are relevant for the question or debate.
Students need to learn how to choose the correct theory or
framework that helps them organize an argument around a
given education issue (manage the topics).

Evaluate the real-life relevance of possible economic
explanations or scenarios, to give an assessment of which
explanation or hypothetical outcome is more or less likely. This
means they have to navigate the sometimes contradicting
models or papers that we have studied and present their
trade-offs.

Competencies:

Present arguments orally and in written form, which are based
on their reading of theory as well as state-of-the-art empirical
findings.

Construct concise cases where they show their
well-rounded appraisal of a situation that connects economic theory
to the real world.

Equipped to evaluate policy proposals critically and
scientifically, and present arguments in favor or against
them.

Becker, G. S. (1991) Human Capital: A Theoretical and
Empirical Analysis, with Special Reference to Education.
National Bureau of Economic Research, distributed by Columbia
University Press. Chapter 4 and its Appendix.

Belley, P. and L. J. Lochner (2007). The Changing Role of
Family Income and Ability in Determining Educational
Achievement. Journal of Human Capital 1 (1), 37-89.

The course material has two components: Economic theory as it
relates to education, and the application of this theory to
real-life issues, using empirical methods.
In the first couple of weeks of the course, therefore, we study
human capital theory and students are expected to be able to follow
the derivations of these models themselves. This requires knowledge
of constrained optimization techniques. They will be practiced in
the exercise classes.
Then, building on this foundation, we study empirical papers and
discuss the benefits/disadvantages of different approaches to using
available data to evaluate questions such as the returns to
education. While students will not be working with data themselves
in this course, a basis in econometrics is needed to a) understand
issues such as causality, and b) interpret the estimation results
presented in the scientific papers.
Ideally, students should have taken the courses Microeconomics I,
Microeconomics II, "Probability theory and statistics"
(Econometrics A) and Econometrics II corresponding to the 2nd year
undergraduate sequence in the Department of Economics at
KU.

Timetable and venue:
To see the time and location of lectures and exercise classes
please press the link/links under "Se skema" (See
schedule) at the right side of this page (E means Autumn, F means
Spring). The lectures is shown in each link.

Please be aware regarding exercise classes:
- The schedule of the exercise classes is only a pre-planned
schedule and can be changed until just before the teaching begins
without the participants accept. If this happens it will be
informed at the intranet or can be seen in the app myUCPH and at
the above link.
- If too many students have wished a specific class, students will
be registered randomly at another class.
- The student is not allowed to participate in an exercise class
not registered, because the room has only seats for the amount of
registered student.
- That the study administration allocates the students to the
exercise classes according to the principles stated in the
KUnet.

at the computers of Copenhagen University. The exam assignment
is given in English and must be answered in English.
____

Aid

Without aids

Marking scale

7-point grading scale

Censorship form

No external censorship

The course can be selected for external assessment.
____

Criteria for exam assessment

Students are assessed on the extent to which they master the
learning outcome for the course.

To receive the top grade, the student must with no or only a few
minor weaknesses be able to demonstrate an excellent performance
displaying a high level of command of all aspects of the relevant
material and can make use of the knowledge, skills and competencies
listed in the learning outcomes.

As a very basic requirement for passing the course, students
must demonstrate sufficient understanding of the human capital
models, correctly recall their goals, assumptions, and predictions
(knowledge of theory), and recall the purpose,
econometric approach, and findings of empirical papers we read
(knowledge of empirics).

In order to pass, students must also demonstrate the
skill of linking their passive knowledge of models
and empirical papers to a given (hypothetical) real-world
situation. This means they must be able to select the models or
papers that are appropriate and relevant to the case at hand, and
then evaluate their different predictions or arguments, and for
example point to the instances where a model's assumption
diverges from a real-life scenario (skill).

In order to receive full credit, students must demonstrate a
well-developed competency to construct arguments
on complex education issues that utilize the best available
resources from economics of education – be they theoretical or
empirical.